Behind The Facebook Data Center Tax Deals

Social networking giant Facebook will build a new 970 thousnd square foot data center in New Albany, with the help of local and state tax breaks.

But the terms of those deals weren’t easy to come by. Ohio Public Radio’s Jo Ingles reports.

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The proposed data center in New Albany, near the line that divides Franklin and Licking Counties, will be powered by 100% renewable energy. Rachel Peterson, Director of Data Center Strategy and Development at Facebook, says this is the tenth of its kind for Facebook.

“It’s going to be delivering hundreds of millions of dollars of investment to the local community and the state as well as thousands of construction jobs and hundreds of full time operational jobs.”

The official statement put out by the public relations firm working with Facebook on the project says there will be 100 permanent jobs created by the project. Peterson says those will be high tech jobs and explains the employees will operate the data servicing at the center. But when asked the average wage of those jobs…..

“We don’t actually comment on the pay of our employees but we are a very competitive employer.

Jo interchange here “Ok. But are we looking at minimum wage jobs, $20,000 a year, can you give me a ball park?”

“We are looking at high quality jobs.”

People who work in construction trades are hoping they will benefit from this. Jeff Rush is a Business Representative for Sheet Metal Workers, Local 24

“Our members would be installing the heating and cooling portion of the work, possibly the metal siding, the exterior insulated siding panels if there are any, which I believe there are on this project. That’s all stuff that falls under our scope of work.”

Jo Interchange here “Is this big business? Is this a big project for you?

“This is a very big project. Yeah.”

There are a lot of state and federal tax credits involved, but at the event, there weren’t many details. New Albany mayor Sloan Spalding says the Facebook deal with his city requires a minimum investment.

“They have a payroll threshold that they have to meet under our agreement and most of the companies, the data centers we have, have no trouble meeting that threshold.”

And the leader of JobsOhio, the state’s private, non-profit, job creation company, was involved in negotiating the deal. John Minor says Facebook’s investment is significant.

“This is actually the second largest capital investment that we have seen here in the state since JobsOhio started. Now that excludes a lot of the energy and shale projects we’ve worked on but this is very significant from a capital investment perspective.”

Some key details of the agreements are known and some are still being worked out. The state’s Tax Credit Authority approved a job creation incentive for two percent of the new Ohio employee payroll from this year to 2026, providing Facebook creates 50 new jobs and $4 million in new annual payroll. The company estimates the value of that to be more than $834,000. And the state has granted a 100% sales tax exemption for the facility for as many as 40 years. The total price tag for that part of the package is more than $37 million. Governor John Kasich says it’s worth the investment and could help attract similar investments in the future.

“I’ll tell you one thing. It’s not going to take us 40 years to make back the investment we make. We don’t buy deals.”

Still, some who have studied these types of deals, but not this particular one, have questions about all of the incentives being offered. Wendy Patton is with the progressive research group Policy Matters Ohio.

“We know that the state investment is probably about $37 million in a 40 year sales tax exemption primarily but also some income tax breaks, the job creation tax credit. If we had that type of investment happening on the floor during budget discussions, there would be hearings. Legislators would question it.

And stakeholders from many different perspectives would come in to testify about it. We have none of that here.”

Patton says more transparency is needed for deals like this one but she knows that’s not likely to happen anytime soon.

“Big money deal, a lot of impact, very little information. So it’s the way the game is played but we think there’s a lot that could be done to improve the game.”

Now that the money is there for the Facebook project, the building begins. The project is expected to be complete in 2019.

Columbus City Council last night approved legislation giving the development director the authority to negotiate the creation of a tax-increment financing district for fast food operator White Castle to expand its corporate offices on Goodale Street and create 300 housing units.

State legislative leaders acting under pressure from an outside group have belatedly named the members of a panel they created to examine more than 9 billion dollars in state tax breaks given annually.

An attorney who played a leading role in a legal challenge of Governor John Kasich's private job-creation entity has filed her own constitutional challenge against JobsOhio with the state Supreme Court.

There was a surprising development in the progress of the public-private entity JobsOhio - one of Gov. John Kasich's key programs. But as Statehouse correspondent Karen Kasler reports, the administration is saying it's not as shocking as it might seem.